Chpater 12 reivew questions from book MUST DO First Flashcards
The standard cost of product B manufactured by BH company includes two units of direct materials at $4.00 per unit. During June, the company purchases 27,000 units of direct materials at a cost of $3.80 per unit and uses 27,000 units of DM to produce 13,000 units of product b
a. calculate the material variance and the price and quantity variance.
a) Step 1: calculate the standard quantity allowed
13,000 units made x 2 units needed = 26,000
material variance = (AQ x AP) - (SQA x SP)
(27,000 x 3.80) - (26,000 x 4 )
= 102,600 - 104,000 = 1,400 F
Material price variance
(AQ x AP) - (AQ x SP)
(27,000 x 3.80) - (27,000 x 4)
102,600 - 108,000 = 5,400 F
Materials Quantity Variance
(AQ x SP) - (SQA x SP)
(27,000 x 4) - (26,000 x 4)
= 108,000 - 104,000 = 4,000 U
Pagley company’s standard labour cost of producing one unit of product DD is 4 hours at the rate of $12.00 per hour. during august, 40,800 hours of labour are incurred at a cost of $12.10 per hour to produce 10,000 units of product DD.
Calculate the total labour variance
calculate the labour price and quantity variance
a)
calculate standard hours allowed
10,000 units made x 4 hrs = 40,000
Total Labour variance
(AH x AR) - (SHA x SR)
(40,800 x 12.10)- (40,000 x 12)
= 493,680 - 480,00 = 13,680 U
Labour price variance
(AH x AR) - (AH x SR)
493,680 - (40,800 x 12)
= 4,080 U
Labour quantity Variance
(AH x SR) - (SHA x SR)
(40,800 x 12) - (40,000 x 12)
489,600 - 480,000 = 9,600 U
Rapid repair services inc is trying to establish the standard labour cost of a typical oil change. the following data have been collected from time and motion studies conducted over the past month.
actual time sepnt on oil change .9 hour
hourly wage rate $ 12 per hour
payroll taxes 12% of wage rate
Setup & down time 10% of act. lab time
cleanup and rest periods 30% of act. lab time
fringe benefits 25% of wage rate
a. determine the standard DL hours per oil change
b. determine the DL hourly rate
c. determine the DL cost per oil change
d. if an oil change took 1.3 hours at the standard hourly rate, what was the DL quantity variance
a) standard direct hours per oil change
actual time spent on oil change .9
plus: set-up and down time .09
cleanup and rest period .27
total 1.26
b) Direct labour hourly rate
cost per hour 12.00
plus fringe benefits 3.00
payroll taxes 1.44
total 16.44
c) Direct labour cost per oil change
(1. 26 x 16.44) = $20.71
d) labour quantity variance
SR x (AH-SHA)
$16.44 x (1.30 - 1.26)
= 16.44 x 0.04 = $.66 U
the flowing information was taken form the annual manufacturing overhead cost budget
VMOH costs $33,000
FMOH costs $22,000
Normal production level in labour hrs 11,000
normal production level in units 3,000
standard labour hrs per unit 4
During the year, 2,500 units were produced, 77,700 hrs were worked and the actual MOH was $53,500. actual FMOH costs equal the budgeted FMOH costs. overhead is applied based on DL hours
a. calculate the total, fixed and variable predetermined MOH rates
b. calculate the total, budget and volume overhead variances
a. Amount Hrs Rate
VOH $33,000 11,000 $3.00
FOH 22,000 11,000 2.00
total overhead $5.00
b. Total overhead variance Actual overhead - applied overhead 53,500 - (units made x amt needed) x MOH rate) 53,500 - ((2,500 x 4) x 5) 53,500 - 50,000 = 3,500 U
c. Overhead budgeted variance
actual overhead - budgeted overhead
53,500 - ((2,500 x 4) x 3) + 22,000
53,500 - 52,000 = 1,500 U
Overhead volume variance
FOH rate x (normal capacity - standard hours allowed)
2.00 x (11,000 - (2,500 x 4))
= 2 x 1,000 = 2,000
Jackson company’s overhead rate was based on estimates of $198,000 for overhad csots and 18,000 DL hours. Jackson’s standards allow 2 hours of DL per unit produced. production in may was $20,500. the overhead budgetd for 1,800 standard DL hours is $18,600 (6,000 Fixed and 12,600 Variable)
a. calculate the total, budget and volume variances for overhead
- calculate predetermined overhead rate
198,000 / 18,000 = $11 hr
total overhead variance actual overhead - applied overhead 20,500 - ((actual units x needed) x rate) 20,500 - ((900 x 2) x 11 = 700 U
Overhead budget variance
Actual - budgeted overhead
20,500 - (standard hrs 18,600) = 1,900 U
Fixed overhead rate
(6,000 x 12) / 18,000 = $4.00
Normal monthly capacity 18,000 / 12 = 1,500 hrs
overhead volume variance
= Fixed overhead rate x (normal capcity - standard hrs allowed)
= 4 x (1,500 - 1,800) = 1,200 F
Rondll company uses a standard cost system. indirect costs were budgeted at $200,000 plus $15 per DL hour. the overhead rate is based on 10,000 hrs. Actual results were:
Standard DL hrs allowed 9,000
Actual DL hrs 10,000
Fixed Overhead $190,000
Variable overhead $ 185,000
a) calculate the fixed overhead production volume variance
b. ) calculate the variable overhead spending variance
c) calculate the variable overhead efficiency variance
d) calculate the over or under applied overhead
a) fixed overhead rate
$200,000 / 10,000 = $20.00
Overhead volume variance Fixed overhead rate x (normal capacity - standard hrs allowed) 20 x (10,000 - 9,000) = $20,000 U
b. variable Overhead spending variance
actual variable overhead - (actual hrs x VOH rate)
185,000 - (10,000 x 15)
= $35,000 U
c, Variable overhead efficiency variance
variable overhead rate x (actual hrs - standard hrs allowed)
$15 x (10,000 - 9,000)
= $15,000 U
d. actual overhead - applied overhead
(190,00 + 185,000) - (9,000 x 25)
= $60,000 underapplied
